Wage Differentials and Wage Discrimination Essay

Wage differentials are differences in wages such as that between brain surgeons and waiters * They occur between occupations, industries, firms, regions, and within these categories * Wage differentials can be explain by supply and demand, bargaining power, the impact of government policy and public opinion * Over time, wage differentials between groups can change * E. g. the gap in wages between premier league players and division 2 players has widened over the last 2 decades, as the premiership’s revenue has increased greatly.

Wage Discrimination is a cause of labour market failure and a source of inequity in the distribution of income and wealth and it is usually subject to government intervention e. g. through regulation and legislation. Discriminatory treatment of minority groups leads to lower wages and reduced employment opportunities, including less training and fewer promotions. The result is that groups subject to discrimination earn less than they would and suffer a fall in relative living standards. This is an example of the wage discrimination. As you can see the supply of black female workers is the same as the white male workers.

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But because of the gender discrimination males are on a significantly higher wage rate Wage Differentials and discrimination between Particular Groups Skilled and Unskilled Workers: * Skilled workers are paid more than unskilled workers, as demand for skilled workers is higher, and their supply is less * MRP for skilled workers is high, as the skills possessed will often lead to higher output per worker * It is more difficult to substituted skilled labour with capital and unemployed workers than it is for unskilled * Skilled workers have a high level of human capital Human capital is the skills, knowledge and experience that workers possess Male and Female Workers: * Men are paid more than women, despite equal pay legislation * This could be due to women working more part-time than men * When hourly pay-rates are examined, men still earn more; but this gap is narrowing * On average, the MRP of women is lower than that of men * One reason was because in the past, men were better educated than women.

However, that is not the case anymore, with more women than men studying at university. * This could be due to the fact that women are disproportionately concentrated in low-paid occupations, like car work, or cleaning * Also, some women lose out on promotions, due to leaving the labour market for things like raising children * Discrimination does still occur to some extent, with some employers undervaluing the services of female workers. Part-time and Full-time Workers: Part-time workers on average receive lower hourly earnings than full-time * One reason for this could be due to the supply of people wanting to work part-time is high relative to demand, as part-time work is convenient for students, and people bringing up children. * The productivity of part-time workers tends to be lower, as they’re less likely to receive training * A smaller proportion of part-time workers belong to trade unions, and higher proportions are women.

Ethnic Minorities: * People from ethnic minorities tend to be lower paid than white workers * This could be due to the fact that they work in unskilled professions, such as catering or cleaning * Also, discrimination takes a part, resulting in a contraction of demand * (If the examiners ask you a question about this they’re racist)

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